What are Blue Chip stocks in the Philippines?

You’ve probably heard it before: Blue Chip stocks are good investments because they are safe and with high potential for profits. But what are blue chips in the first place, why are they called such, and what stocks are considered “blue chips” in the context of the Philippine stock market?

What are Blue Chip stocks?

Simply speaking, “blue chips” in the stock market refer to companies that are well-known, large, and with a history of sound financial performance. That definition still sounds a bit abstract, though, so we’re providing below more detailed characteristics of blue chip companies.

The PinoyMoneyTalk definition of Blue Chip stocks are those companies that are:

typically large, as measured by asset size or market capitalization;

generally the market leader or one of the top three companies in its industry;

The term “Blue Chips” is believed to have originated from the game of poker, where blue ones are the most expensive in the simplest set of white, red, and blue poker chips. Recently, however, blue chips are no longer the most expensive, with the addition of other colored chips — sometimes white or brown or black — that carry a higher price value than their blue counterparts.

Blue Chip Stocks in the Philippines

Strictly speaking, there is no clear and fixed set of “Blue Chip” companies in the Philippine Stock Exchange (PSE). But following our definition above, we can identify possible “blue chip companies” by looking at two distinct categorization:

Those comprising the PSE index or PSEi; or

Those with the higher market capitalization

If we use these categories, the blue chip companies in the Philippines are the following.

1. Blue Chip companies belonging to the PSEi

If we’re looking for blue chip companies that are typically large, highly liquid, and with reliable earnings and sound financial performance, we could refer to the 30-company PSE index generally considered to be the barometer of Philippine business and economic conditions.

As of 2018, the PSEi is composed of the following stocks, which some might say are their “blue chip” stocks.

2. Blue Chip companies with the highest Market Capitalization

If we stick to the definition of blue chip companies as those that are large and well-established, we can refer to our list of the biggest Philippine companies based on market capitalization.

Market capitalization is computed by multiplying the company’s current stock price and its total number of shares outstanding. As of 2018, the top 10 PSE companies with the biggest market capitalization are the following.

Just a caveat: investing in blue chip stocks is not a guarantee that you will make money. There’s also no guarantee that a blue chip stock will not produce a loss. Stocks — whether they are blue chips or not — are risky investments, so invest only an amount appropriate to your risk appetite.

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